A small south Waikato town has become the first community in the country to ban the sale of synthetic highs - and other Waikato towns could be quick to follow.

From today, Putaruru retailers will no longer stock or sell legal highs - despite one retailer saying it will cost him up to $100,000 a year in profits.

And the initiative, which is being backed by police and health workers, has already won the support of other Waikato leaders who say a similar ban could be introduced in their towns.

Putaruru police Sergeant Jason Shailer said the initiative was a community response to the damaging effects synthetic drugs were having on the town.

"There was this mistaken belief that, just because these products were legal and were being stocked in dairies, that they were safe," Shailer said.

"That's obviously not true. Across the country we've seen the damage these products are having on communities and Putaruru is no different to anywhere else, things just happen at a different pace."

Shailer said the town's three dairies were fully supportive of the initiative.

"It was just a matter of putting the facts in front of them and discussing with them how and when they would take the products off the shelves."

The Psychoactive Substances Bill has its final reading in Parliament this week, placing new controls and restrictions on the sale of synthetic cannabis or herbal highs.

The bill, which is expected to be passed into law this month, puts the onus on legal-high sellers and manufacturers to show their products are safe.

The testing regime is expected to cost manufacturers up to $2 million.

Associate Health Minister Todd McClay said the legislation would introduce stiffer penalties for retailers who sold legal highs to people under 18 years of age, including imprisonment or fines of up to $500,000.

McClay said the bill would also empower councils to ban the sale of synthetic or herbal highs under council bylaws.

Ruth Moore, co-founder of Hamilton's new Families Affected by Addiction support group, was pleased with Putaruru's stance but thought it should be wider.

"It's great that the community is saying that this is not OK, but we should put pressure on the Government to outlaw this stuff," Moore said.

"There's so much medical science about how bad K2 is and how it affects the body, the kidneys. It's also dangerous because we have got people driving around high on K2. Get rid of it."

Waikato District Mayor Allan Sanson and Waipa District Mayor Alan Livingston said Putaruru's initiative had strong merit and could be adopted by other towns.

Both mayors said they hadn't been approached by their community about concerns over the sale of synthetic cannabis but would examine a similar ban if asked.

"Like most people I'm horrified that these things are being sold in our dairies. The fact you're now getting a community standing up and saying they don't want it in their town has to be a good thing," Sanson said.